Brokers need to be vigilant when dealing with off-plan properties in Dubai as there are no clear guidelines on what protection they have if a developer pulls out, the CEO of a real estate firm has said.
Tim Boswell made the comments a few weeks after his company, Ocean View Real Estate, had its business licence revoked by Dubai Courts because of a payment dispute with a German investor.
The investment, by German firm Ventafonds Capital, under the trading name Dubai Opportunity 1 GmbH & Co. KG, was made on a floor in the Legacy Tower, Dubai Waterfront, in late 2007. The project never took off.
Boswell’s firm, which has traded for 14 years in Dubai, had brokered the deal. The court ordered Boswell to pay the German firm Dhs2.4 million, of which Dhs1.4 million was taken out of his bank account.
Speaking to 7DAYS, Boswell said: “We sold one floor in the Legacy Tower and the development never happened. I also lost an investment of Dhs1.4 million that I had made on a property in the Dubai Waterfront. We’re only the broker and we had nothing to do with the development of the project. For instance, if we sell a property for a developer and they don’t develop it – are we responsible? The law isn’t clear.
“The market needs to know if we are allowed to sell off-plan properties. If everyone who bought off-plan properties went after the brokers, there wouldn’t be any brokers left in Dubai. My advice to brokers would be to do as much due diligence as possible on whatever they are selling off-plan and don’t assume that the master developer has done their due diligence.”
Boswell said his licence will be unblocked by authorities once the remaining amount has been paid to the German investor.
One of the CEOs of Ventafonds, Oskar Edler von Schickh, told 7DAYS they are expecting one full payment by Boswell and will not accept instalments, which Boswell has offered.
Schick said: “We had a contract that was meant to protect us. As the project was not executed we had no other chance than to require our money back. If Ocean View had acted in a commercially correct way, they today still might have been able to work. We are sure we would have found a solution if they had been interested at that time.”
Boswell, however, is determined to keep his firm running and said he hopes to reopen next year. He said he has already let go of 24 of his employees while 40 remain.
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